Dev Exit — 22 Apartments

Our client had completed a 22-unit apartment scheme in the South East to a high standard. Fourteen units had sold, but eight remained on the market. The development lender's facility had reached the end of its term and they were pressing for full repayment — the loan was accruing default interest at a punitive rate.

The developer was caught in a common trap: selling the remaining units at a discount to repay the lender quickly would wipe out the project's profit margin. But continuing on the development facility at default rates was haemorrhaging cash. They needed a bridge to cheaper money — quickly.

Dev exit finance sits in an awkward space. The development is complete, so it's no longer a construction loan. But the units are unsold, so it's not a standard investment facility either. Many lenders don't have a product that fits neatly.

The existing lender had a first charge and was unwilling to extend terms at a reasonable rate. Any replacement facility needed to fully redeem the outstanding balance, cover exit fees, and provide enough headroom to service interest while the remaining units sold. The valuation of unsold stock also needed careful handling — we needed a valuer who understood the local market and could support realistic individual unit values rather than a discounted bulk figure.

We structured a dev exit facility at £4.8m — sufficient to fully redeem the existing development loan including all accrued interest and exit fees. We produced a clear appraisal and exit strategy that presented the remaining units and the borrower's position in the strongest possible light. The new facility was on an 18-month term at 5.9% per annum, representing a saving of 3.2% against the default rate the developer was paying.

We selected a lender experienced in stabilisation finance who was comfortable with partial occupancy. The facility was structured with individual unit releases — as each apartment sold, the corresponding portion of the loan was repaid, reducing the outstanding balance and the developer's interest burden progressively.

We also negotiated a minimum release price mechanism that protected both the lender and the developer's margin, ensuring no unit would be sold below an agreed threshold.

The facility completed within three weeks of application, immediately stopping the default interest clock. The developer had the breathing room to market the remaining eight apartments properly rather than accepting fire-sale offers.

All eight units sold within 14 months at prices in line with or above the original appraisal. The total finance cost on the dev exit facility was £283,000 — a fraction of what the developer would have paid remaining on the development loan at default rates. The 3.2% rate saving alone preserved over £150,000 of profit that would otherwise have been lost to punitive interest charges.